Wednesday, June 20, 2012

Pray for the welfare of electricity monopolies

The government in the US grants monopolies to electric companies. Thankfully, it's not one company per country, but oftentimes, it is one company per state, or per region, or at least per city.

Recently, the electric monopoly of Boston area, NStar, has received a good share of criticism. Most of it has to do with outages resulting from old or badly maintained equipment, personal errors, long response times to electric line damages (thousands of families were without electricity for weeks as a result of a "hurricane" last year — part of the time, during freezing weather), drastically rising costs of service and operation, and environmental mishaps. Basically, every problem that can happen to an electric company has happened to NStar.

I am sure the same is the case with almost every monopoly out there. I remember, when I was living in the South, the same things were said about the local energy company, Entergy.

Some of these things may not be the companies' fault. For instance, rising service costs have to do with rising gas prices, which the companies are hardly responsible for. On the other hand, we simply do not know what the "right" price for electricity in a given region should be, because there is no competition, and a company can charge higher than it would had the energy business existed in a free-market condition. The same goes for response times, equipment maintenance, etc.: all these problems which are blamed by NPR hosts on "greed" have to do with the government creating a monopoly. And also, probably, with greed. And mismanagement. But greed and mismanagement are allowed to flourish and give fruit when there is no competition. Free markets punish for them. Customers punish for them.

All this is beside the point, however. We do all use electricity. Every day, people use it. Hospitals use it. Police and firefighters use it. Businesses use it. Synagogues use it. We use it during the week, on Shabbos (passively) and on Yom Tov. Electricity has greatly transformed our existence, has benefited us immensely. It has allowed us to live more comfortable, more fulfilled, more meaningful, and longer lives. It has allowed us to be (with all other things being equal) better human beings and better Jews. Just today, without electricity I may have suffered great health problems (G-d forbid) as a result of the heat wave.

Therefore, I wish to propose the following two statements:

1. Pray for the welfare of local electricity monopolies. For without them, we would all sit in the dark. We would be cold in the winter and hot in the summer.
2. Even a worst electricity monopoly is better than lack of electricity monopolies, when a man has to sit in the dark and live in the Middle Ages.

Clearly, the two statements are ridiculous. Right?

Without NStar, there would be a different company. If it's a bad electric company, it must fail and be replaced by a better one. Better yet: why not allow electric companies to compete and see which one does a better job or gets a greater share of the market? In fact, let two or more companies co-exist and cater to different customers' preferences. I am currently trying to decide whether to stay with my current Internet service provider (which charges cheaper rates and gives better speed of connection, but whose service outages are more frequent) or switch to a different one. The same kind of choice should exist for electric companies.

And the second statement is silly too. It seems to imply that there are only two choices: NStar or sitting in the dark. But that is clearly not true. There is a middle ground.

(Also, it's not really true that without electricity we would be cold in the winter or hot in the summer. People would come up with some of the obvious alternatives.)

So, why, when the same two statements are said regarding the government (first one is modeled on a Mishna, second — on a rishon's comment to the Mishna), we just gulp them up? I am not saying that we should just discard something that Chazal say, G-d forbid, but perhaps when the statement is strange, we can use a little common sense and logic to try to figure out its meaning and applicability, as opposed to doing Bible-thumping.

Perhaps what Mishna said was that we should value electricity... I mean, law and order — not the actual organization of the government, but the service that it provides. Just like we should value medicine. Without it, people would surely die in many cases. Does this mean there has to be a monopoly on medical decisions in a given geographic area (and, for that matter, as wide an area as possible)?

Perhaps in Mishna's times and the place where it was written, there was no societal concept of anarcho-capitalism (many independent and passively competing sources of law and order coexisting within the same territory). We know that such a thing has existed in the past, but it doesn't mean this concept was available to the specific society of Mishna's times and place (or those of the rishon commenting on the Mishna, even though he was a relative contemporary to medieval Ireland and Iceland).

Political concepts are not much different from technology or medicine or economics. All of them are just ideas about how to do things. Their accumulation and development require research, passage of information down the generations, ability to improvise and experiment, and flexibility to accept change. We shouldn't blame Chazal for working within the political realities of their times any more than we should blame them for working within technological, economic, or medical realities of their times.

But then again: we should be cautious to accept blindly the statements that are so strongly intertwined with the state of the contemporary knowledge as binding to our times, and, worse yet, as some sort of eternal instruction of how to view certain phenomena. That may refer to bleeding or leeching; that may also refer to cornering the markets or the government.

1 comment:

You might not be able to choose your utility company, but with deregulation in many states, such as MA, you can choose a provider for the supply of your electricity and or natural gas. You can even shop around for the lowest rate and lock-in that rate during pricing lows (such as now for natural gas). Granted, you are forced to pay your utility for delivery of the commodity, but to say that energy utilities are complete monopolies is not entirely true anymore in many states.